6. Royalties And Reimbursement
6.1 The Licensee agrees to pay the IC a noncreditable, nonrefundable license issue royalty as set forth in Appendix C.
6.2 The Licensee agrees to pay the IC a minimum annual royalty as set forth in Appendix C.
6.3 The Licensee agrees to pay the IC earned royalties as set forth in Appendix C.
6.4 The Licensee agrees to pay the IC Benchmark royalties as set forth in Appendix C.
6.5 A patent or patent application licensed under this Agreement shall cease to fall within the Licensed Patent Rights for the purpose of computing earned royalty payments in any given country on the earliest of the dates that:
(a) the application has been abandoned and not continued;
(b) the patent expires or irrevocably lapses; or
(c) the patent has been held to be invalid or unenforceable by an unappealed or unappealable decision of a court of competent jurisdiction or administrative agency.
6.6 No multiple royalties shall be payable because any Licensed Products or Licensed Processes are covered by more than one of the Licensed Patent Rights.
6.7 With regard to unreimbursed expenses associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights and paid by the IC prior to the effective date of this Agreement, the Licensee shall pay the IC, as additional royalties, within sixty (60) calendar days of the IC’s submission of a statement and request for payment to the Licensee, an amount of royalties as set forth in Appendix C of this Agreement.
6.8 The IC agrees, upon written request, to provide the Licensee with summaries of patent prosecution invoices for which the IC has requested payment from the Licensee under Paragraph 6.7. The Licensee agrees that all information provided by the IC related to patent prosecution costs shall be treated as confidential commercial information and shall not be released to a third party except as required by law or a court of competent jurisdiction.
6.9 The Licensee may elect to surrender its rights in any country of the Licensed Territory under any of the Licensed Patent Rights upon sixty (60) days written notice to the IC and owe no payment obligation under Paragraph 6.7 for patent-related expenses paid in that country after the effective date of the written notice.
6.10 NO ROYALTIES SHALL BE PAID WITH FUNDS STEMMING FROM ANY FEDERAL CONTRACT, GRANT, OR COOPERATIVE AGREEMENT.
8. Record Keeping
8.1 The Licensee agrees to keep accurate and correct records of Licensed Products made, used, sold, or imported and Licensed Processes practiced under this Agreement appropriate to determine the amount of royalties due to the IC. These records shall be retained for the term of this Agreement and for at least five (5) years from the last day of the final reporting period and shall be available during normal business hours for inspection, at the expense of the IC, by an accountant or other designated auditor selected by the IC for the sole purpose of verifying reports and royalty payments hereunder.
8.2 If an inspection shows an underreporting or underpayment of royalties due to the IC in excess of five percent (5%) for any twelve (12) month period, then the Licensee shall reimburse the IC for the cost of the inspection at the time the Licensee pays the unreported royalties, including any additional royalties as required by Paragraph 9.6. All royalty payments required under this Paragraph shall be due within sixty (60) calendar days of the date the IC provides notice to the Licensee of the payment due.
8.3 Licensee agrees to conduct, or to arrange and pay for the cost of, an independent self-audit of sales and royalties at least every two (2) years if annual sales of Licensed Product are over Five Million Dollars ($5,000,000). The audit will address, at a minimum, the amount of gross sales by or on behalf of Licensee or any Affiliate during the audit period, the amount of funds owed to IC under this Agreement, and whether the amount owed has been paid to IC and is reflected in the records of Licensee. Licensee will submit the auditor’s report promptly to IC upon completion. Licensee will pay for the entire cost of the audit.